I was reading an article talking about unrest in the Ukraine and the article contained a chart about their GDP. I was searching through the GDP statistics when I came across an article that just floored me. The following can be found in an article posted on WorldNetDaily.

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.  

Here you can see on the chart how the money breaks down.

How is the government paying for all of this?

 The government has two ways of obtaining money. First, the government can “print” more money by controlling M1, M2, and M3. M1 is the narrowest category of money; however, the only real measure we have of the money supply because the Federal Reserve stopped reporting M3 statistics since 2006.  (To find out more about money visit Investopedia’s great article “What is Money?”)

As you can see in the following chart, M1 has spiked up dramatically in the past few months and has been growing quite rapidly over the past decade.

According to an article on www.investingblog.org found here, “In just one year the M1 supply from December 5 2007 to December 3 2008 grew by 75.2%.” Generally, any increase in the money supply leads to inflation. Prices will adjust to your purchasing ability.

If we look at a chart of M1,M2 and an estimated M3, we can see that the Federal Reserve is rapidly increasing the supply.

The second way the government can pay for things is by selling their debts in the form of U.S. Treasury Bills, which are referred to as fixed-income securities. These bonds pay a fixed interest rate to the owner. For years, other countries such as China and Japan have been purchasing these bonds assuming the dollar and U.S. government was the most stable form of investment.

As I reported in a previous article, Obama Hood: A New Era of Responsibility, the government has been auctioning off these bonds at a record pace. Buyers of these bonds are drying up due to a global recession and possible depression. Which still presents a catch 22 for the government. Sell less bonds and not bring in enough cash to pay for current obligations or sell more bonds and be forced to pay massive amounts of interest to the bond holders, creating more debt obligations.

This is why people are saying our children will be forced to pay for this spending. As you can see, increasing the money supply leads to inflation and financing debt(borrowing debt) through government backed fixed-income securities leads to the devaluation of the currency. As this two-headed monster converges, we will soon see extremely high prices for goods while our currency will be worth less, creating a catastrophic scenario.

So, to bring this all full circle, the government is running out of time to raise enough money to fullfill its $65 trillion global commitments. Eventually the effects of increasing the money supply and financing huge amounts of debt will converge together popping our bubble creating a massive explosion that will dwarf the Great Depression.

These are the issues at hand. This is why 250 economists signed a petition organized by The Cato Institute claiming that doing nothing(while not preferred) is actually better than continuing down this path of gigantic spending.

There is one, and only one possible result, Federal bankruptcy.